How to do Journal Entries/ How to make Journal :

 How to do Journal Entries/ How to make Journal :

Firstly, we should know the Journal format then we should have a knowledge about the Debit and Credit rules of Accounting. In Journal , we will have date columns, description or particular column , References column and debit and credit column. Now, we are going to see that how can we record the business transactions in Journal :

1.    Aqsa started Business with Cash on 2021, 1 January  with RS/-10,000.

So, in this entry , you will have two accounts cash and capital account. Cash is an assets and whenever assets increases it will be debited and  whenever capital increases, it will be credited.

 

 

2.    Purchased Goods of RS/-6,000 on January 2.

For goods purchases we will used purchases account so, purchases is our expenses and when expenses is increased it will be debited and we are paying cash so it means that we will do payment and whenever assets decreased it will be credited.

 

3.     Ali  buy goods  on January 3 for 6,000 in which he paid 3,000 in cash and remaining amount is billed for the next week.

            So, it is a compound entry in which Sales  account , cash and  Ali account is involved.         We will receive a cash and it will be debited because it is increasing and Sales  are credited because it is also increased and whenever it increased , it will be credited and Ali account is also debited because Ali is our debtor and debtor is Account receivable is asset so, it will be debited.

4.     Nadeem purchased goods from Aqsa on January 5, of RS/-8,000 in which she give him a discount allowed  of 2% .

Discount :

So, 8,000*2/100= 160.

Cash which Nadeem will pay :

Now, Subtract 8,000 from 160

 8,000-160=7,840.

 

5.    Aqsa pay rent in advance for Factory on Jan 9 of RS/-7,000.

In this entry, paid rent in advance is our prepaid assets because she does not utilize it so in this way , it is our assets . if you  don’t know about prepaid , I have explained it in detail in my previous blog of  types of Journal entries. Cash will be credit because it is decreasing.

 

6.    Aqsa take loan for four year  from bank of RS/-20,000 on Feb 1.

In this case, long term loan is liability and it is increasing so it will be credited and cash will be debited.

 

7.    Paid Salaries to employees on Feb 1 for RS/-3,000.

Salaries is expenses . expenses is increases so, debit the salaries account and cash will be credited.

 

8.    Withdraw cash of RS/-2,000 on Feb 2 for personal use.

Drawings is our expense so it is increasing so drawings will be debited and cash will be credited because it is decreasing from business.

 

9.    Aqsa purchases inventory on Feb 3 of RS/- 7,000 from Ayesha.

            Inventory is asset and it is increasing so debit the inventory account and credit the Ayesha account because  Ayesha is our creditor she has to pay them for inventory and creditor is our liability and it is increasing.

10. Ali paid RS/- 3,000 on Feb 6 which he had billed on January 3.

   So, Ali will be credited because he is our debtor and debtor is decreased because he paid. Cash will be credited.

 

11. Aqsa purchased furniture on Feb 7 for RS/-2,000 and received a discount of 8%.

Furniture is asset and it is increasing so debit furniture account and credit the cash account because she paid cash and discount received will be credited.

Discount Received :

2,000*8/100 = 160

Cash :

2,000-160 = 1840 because 160 is our discount and we don’t need to pay 160 that is why we will subtract 160 from original amount .

 

12. Aqsa paid RS/- 7,000 to Ayesha on Feb 9 which she  had billed previously

Ayesha account will be debited because she paid her liability and whenever lability decreased , it will be  debited and cash will be credit.